Fair Work Ombudsman calls for penalty increases to fight “malevolent” operators who breach workplace laws

Insolvency advisors

The Fair Work Ombudsman has thrown support behind the government’s “vulnerable workers” legislation, saying businesses doing the right thing are being disadvantaged by a “pernicious” minority of employers that flout the law and the current system for stamping out exploitation does not go far enough.

Natalie James gave evidence on Wednesday to the Senate Education and Employment Legislation Committee, outlining the Fair Work Ombudsman’s (FWO) response to the Fair Work Amendment (Vulnerable Workers) Bill 2017, which was introduced to the House of Representatives in March.

The bill proposes to give additional investigative powers to the Ombudsman, as well introducing up to 10-fold increases in maximum penalties for employers, franchisees and franchisors engaging in systematic underpayment of staff.

In a detailed critique of the current processes for chasing those who breach workplace laws, James said the Ombudsman’s office enthusiastically supports the bill and there are currently significant barriers to securing prosecutions against employers engaging in poor conduct.

“For every one we take to court there are others we cannot take action against and still others we do not even know about because people are too scared to report them to us,” James said.

James said the measures contained in the bill would help her office chase better outcomes for the whole business community, citing “stories that still shock me because of the calculated and malevolent motivations behind the appalling treatment that some migrant workers face in our country”.

When introducing the bill earlier this year, Minister for Employment Michaelia Cash said the legislation would crack down on “dodgy bosses”, both through increased penalties and the introduction of investigative powers to the Ombudsman’s office for the first time.

“The bill will help deter, catch and punish unscrupulous bosses and protect responsible employers,” the Minister said in March.

In evidence before the committee and in the Ombudsman’s submission on the issue, James argues her office needs more powers because some employers take a “calculated risk” that they might be subject to an investigation, but go ahead with bad behaviour anyway.

The task was to tackle “a minority that is distorting our labour markets and tarnishing our reputation as a fair and decent place to work,” James said.

However, the proposal to increase penalties for employers has not been met with support in all sectors of the local business community. Last week reports suggested the Franchise Council of Australia (FCA), headed up by former small business minister Bruce Billson, was engaging in a campaign to water down some parts of the legislation over claims it specifically and unfairly targeted franchises. 

Franchise groups have previously told SmartCompany they believe the proposed penalty changes, which would alter the Fair Work Act, are a regulatory overreach that will stop international businesses from entering the Australian market. The Franchise Council of Australia has expressed concerns over “joint employer” provisions in the bill, which would make a franchisor liable for penalties if it’s found they should have been aware of systematic breaches of workplace laws by those in their franchise systems.

In its submission on the legislation, the FCA says without amendments, the bill “will trigger moves way from franchising and variations to business models despite franchising being considered the most effective and efficient to facilitate enterprise success because of the risk of the new ‘joint employer liability’ that singles out franchising”.

However, both the government and the Ombudsman have previously highlighted that if a business is doing the right thing, it has nothing to fear.

“No one single measure will fix this issue overnight, but the package of measures contained in this bill will go some way to giving the Fair Work Ombudsman the tools to combat the most serious worker exploitation,” James said before the legislative committee yesterday.

SmartCompany contacted the Fair Work Ombudsman but the Ombudsman’s office declined to provide further comment. The Franchise Council of Australia was unable to make a representative available for an interview with SmartCompany prior to publication.

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